The recent statements by President von der Leyen on a possible “relaxation” of antitrust rules on mergers have sparked considerable interest in financial circles, which have long called for greater market concentration to reduce competition and recover some margin. The issue of financial and industrial sustainability in the telecom market has always been hotly debated, but it is sometimes driven by generic narratives and unsubstantiated analyses. It comes as no surprise that a recent CEPR study has reached conclusions, backed by objective data, that differ considerably from the prevailing narrative: according to the researchers, the European telecom sector as a whole has, over the past ten years, been able to remunerate the capital employed, and does not appear structurally in deficit relative to its cost of capital. The authors contest the argument that chronic under-remuneration of capital would, in and of itself, make large-scale mergers or a blanket relaxation of regulation necessary to safeguard investment. They argue that, since average returns are close to or at par with the cost of capital, calls for “regulatory holidays” or consolidation must be evaluated on a case-by-case basis, in light of competition objectives and consumer welfare. In particular, they note that competitive intensity has driven prices down and delivered benefits to consumers, without translating, at the sector level, into structural distress.
President Von der Leyen’s statements
Whatever the financial health of the telecom sector, the President’s statements do not appear to be specifically addressed to it. They are not of general scope, but should instead be read in the context of markets that are genuinely integrated at the European level. The idea is that, where a true single market already exists or is being sought (e.g., cloud, semiconductors, defense, certain digital segments), it may be necessary to allow greater consolidation in order to develop “European champions” capable of competing with large American or Chinese players on global markets.
In these contexts, European companies compete directly with non-EU rivals operating on continental or global scales and benefiting from economies of scale and scope that are difficult to replicate for operators fragmented on a per-member-state basis. A relaxation of certain rigidities in antitrust enforcement is therefore presented as a tool to close a competitive “scale gap,” not as a blanket green light for any form of consolidation.
Why the argument does not (yet) apply to Telecoms
However, this reasoning fits poorly with the mobile and fixed telecommunications sector, which remains in practice organized primarily on a national basis. European telecoms do not compete with American or Chinese operators in their respective European retail markets: they compete almost exclusively with one another, within each domestic market, under national and European regulation.
In other words, there is currently no direct competition between, for example, a European MNO and a US or Chinese MNO operating in the latter’s domestic market. The competitive challenge facing European telecoms is therefore not the lack of “European champions” capable of defeating AT&T or China Mobile; it is rather the combination of regulatory fragmentation, sector-specific obligations, and demand structures that make it difficult to fully capture economies of scale.
The narrative of too many European operators
In light of this, it is misleading to use the “European champions” discourse to justify a narrative suggesting that the supposed rigidity of antitrust rules has produced “too many telecom operators.” In the case of telecoms, relaxing enforcement would not create a European champion capable of winning global competition, but at most reshape the structure of a few already oligopolistic national markets.
The narrative of “too many” telecom operators in Europe is also marred by a systematic misunderstanding: aggregate EU-level figures are treated as if a single, fully integrated market already existed, whereas the sector remains structured across 27 distinct national markets. In virtually every country, the typical structure of an advanced economy prevails, with approximately 3–4 fully-infrastructured MNOs, supplemented by a constellation of MVNOs that do not alter the effective number of networks.
If one multiplies 3–4 MNOs by 27 member states, one mechanically arrives at “nearly 100 operators,” a figure often cited impressionistically in public debate. The comparison with the United States or China ignores this factor: in those markets, a single national market exists, the legal barriers to operating on a federal basis are much lower, and it is therefore natural that the number of operators is smaller while each individual operator serves a much larger customer base.
In any case, even in the United States there are far more operators than the three typically referenced: in addition to the three national carriers (AT&T, Verizon, and T-Mobile), there are dozens of state-level or sub-state operators, plus MVNOs. When fixed-line operators are added, the total runs into the hundreds of companies.
The actual role of EU antitrust
EU competition rules affect only a very limited subset of possible consolidation operations in both mobile and fixed markets, and in practice only the most significant transactions: in fixed, these involve incumbent-related deals (such as the “Rete Unica” merger in Italy), while in mobile the typical case is a 4-to-3 merger. The most heated debate concerns mobile, largely because it is the sector in which finance has invested most heavily in recent years, and returns have fallen short of expectations. Over the past ten to fifteen years, the number of mobile cases examined in depth (involving a reduction from four to three MNOs) has been on the order of a handful, certainly not “dozens” of systematically blocked transactions.
In several cases the Commission has authorized mergers subject to certain conditions (structural remedies or wholesale access commitments), and in others has prohibited them, but always with respect to individual national markets, not on the basis of an abstract objective of “maintaining many operators in Europe.” For the vast majority of entry, exit, or smaller-scale consolidation decisions, the choice remains entirely in the hands of the companies themselves, within the general framework of competition law as in any other sector.
Policy conclusion
The idea that Europe has “too many operators” due to antitrust enforcement inverts the causal relationship: the high number is the product of regulatory and political fragmentation across 27 national markets, not of excessive enforcement. The real policy variable is not “how many operators do we want in Europe?” but rather “what path of market integration and regulatory convergence do we want to pursue in order to allow pan-European operators to emerge without sacrificing local competition?”
Contrary to the simplified pro-consolidation narrative, the European track record shows that:
- The cases that are genuinely controversial or blocked are few relative to the total number of European national markets.
- There are various examples of 4-to-3 mergers that were prohibited, authorized with remedies, and authorized without remedies, confirming that there is no automatic rule on the “number of operators.”
- European antitrust intervention concerns individual large-scale transactions, not the overall structure (multiplied across 27 markets), which remains largely the outcome of business decisions and regulatory fragmentation.
— By Innocenzo Genna, Legal specialist in EU digital policy, competition and liberalization regulations
